Bajaj small car takes high mileage route

Bajaj Auto’s ultra low cost (ULC) car, scheduled to hit the roads in 2010-11, is expected to deliver on-road mileage of over 30 km a litre, according to top sources involved with the project. The vehicle will roll out of a new plant in Chakan near Pune.

The company believes that this will be the most important differentiator in this price segment of Rs 1.5 lakh where the car will be pitted directly against the Tata Nano, scheduled to be launched on March 23.

Since this is a platform, there will be more than one version with different price points going beyond the basic level of Rs 1.5 lakh (on-road). It is expected to have both petrol and diesel options, unlike the Nano which will kick off with a petrol version while the diesel will follow in end-2010.

The Bajaj team handling the ULC project is, apparently, convinced that doubling mileage is more important than halving the price. This has stemmed from Bajaj Auto’s own experience in the past when the once robust market for the Chetak scooter literally shifted overnight to motorcycles, which were dearer but much more fuel-efficient. “The idea is to work on this car with the mindset of a motorcycle,” sources said.

The ULC project was conceived as a three-way alliance where Bajaj would hold 50 per cent equity with Renault and Nissan accounting for 25 per cent each. However, in a statement signed by the Managing Director, Mr Rajiv Bajaj, on Saturday, the message was clear that the company would go it alone if the other two were to back off.
Primary responsibility

“Bajaj is proceeding as before to implement this project and any financial or other constraints that Renault-Nissan may have will have no bearing on the ability of Bajaj to implement this project,” it stated. It added that the company would have “primary responsibility for the design, development, manufacturing, and supply chain activities of this project”.

Speculation has been rife that Renault is having second thoughts about its participation though its Chief Executive Officer, Mr Carlos Ghosn, is particularly passionate about the ULC project as it fits in with his pet theme of “frugal engineering.”

On the other hand, Mr Bajaj has gone on record to say that the way forward for such a project is to find creative and profitable solutions rather than look for sub-optimal alternatives.

Suppliers involved with Bajaj Auto’s two-wheeler business will have a big role to play, which will go a long way towards keeping costs in check.

At the time of finalising the joint venture with Renault and Nissan, the company had said that the initial capacity at the plant would be four lakh units annually. Whether this will be revised in the backdrop of the economic slowdown and the prospects of a slow revival, remains to be seen.